Finding a niche for growth

Valkyrie Enterprises focuses on areas immune to most budget cuts

Valkyrie Enterprises is a company prodigy of sorts. In just five years, this Virginia Beach-based provider of engineering and technical services has leapfrogged from a fledgling veteran-owned small business to a high-growth, niche contractor for the U.S. Department of Defense, earned a hard-to-obtain ISO certification for system quality and became well known as one of the best places to work in Virginia (and within the defense industry).

The company, which has 165 employees and expects to hire another 50 this year, earned $22 million in 2011, a 50 percent jump over 2010, thanks in large part to repeat and expanded business from existing customers. Valkyrie is on track to top $30 million in revenues in 2012, but that number is likely to rise, as company executives are negotiating to acquire three other businesses within the next year.

“It’s not too often that you see this type of activity with a company as young as ours,” says company founder and CEO Gary Lisota. “There’s excellent buzz around our company, and that’s given us good visibility with customers, partners and potential hiring candidates, as well as with our competitors. That kind of buzz really builds on itself.”

Much of Valkyrie’s out-of-the-gate success can be chalked up to strong planning. Lisota previously headed up AMSEC LLC, a publicly traded, multibillion dollar engineering services firm. He brought to his new venture an experienced back-office management team and resolved to run the company according to two simple but effective philosophies: hire the best and follow the money.

To achieve the first goal, Lisota and his team immediately began offering job candidates the kind of big salaries, premium health benefits and perks more typical of big employers — while also building a family-friendly, high-touch culture. Lisota, for instance, makes it a point to attend after-hour functions with employees and personally send out birthday cards and handwritten notes.

Lisota explains that “following the money” means pursuing work in program areas that are largely immune to future budget cuts — and might even warrant more investment. From the start, Valkyrie saw its best opportunities in the niche areas of combat systems modernization, force readiness and ballistic missile defense systems. Its primary customer is the U.S. Navy’s Naval Sea Systems Command (NAVSEA).
“Even in tough economic times, money is going to be spent on something, and we’ve made it a point to be involved in the type of programs that are still viewed as important — even when other programs are being shut down,” Lisota says. “I think we’ve done a good job at selecting the right kind of areas to be involved with.”

However, with the Department of Defense facing what could be as much as $1 trillion in budget cuts during the next 10 years, continuing to plan and choose well will be more challenging. Addressing that reality is the No. 1 priority for Lisota and his team.

Valkyrie Enterprises already is looking to bolster its capabilities. The three companies that Valkyrie has targeted for acquisition, for example, would not only add to the company’s technical and engineering skills but also provide it with a tangible product.

“We’d like to have a more blended offering in the future, so we can offer our customers not just knowledge-based or services-based solutions but also technology-based solutions,” Lisota explains.

He adds that his company also is taking steps to diversify its client base, improve customer service by opening offices near key Navy installations, beef up its cyber-security credentials and invest heavily in research and development to create technologies advantageous to a leaner military force.

One challenge that Lisota is not concerned about is effectively managing his company’s explosive growth. He planned for that, too. “My goal is to be in the $120 to $150 million range,” he says. “At that size, we’d be a big enough to compete with the big players in our market but not so big that we’d lose our small-business culture and responsiveness.”